The scale of the City’s demise has been laid bare by figures that show the
number of frontline workers in the banking industry has fallen to an
eight-year low.

The number of “approved” staff working in the financial services industry has fallen to just under 152,000, the lowest level since the summer of 2004.

Analysis of the Financial Service Authority’s database by corporate finance boutique IMAS, shows that people employed in frontline jobs by banks have fallen by nearly 20,000 since the financial crisis from a peak of about 170,000 in mid-2007.

FSA-approved staff at Barclays has fallen from a peak of more than 4,000 in 2010 to 3,430, according to IMAS’s figures, while Lloyds has slashed the number of approved staff it employs from more than 2,000 to just under 1,100 today.

The collapse of City job numbers shows no signs of slowing and is likely to accelerate, according to separate research from Deutsche Bank, which yesterday warned that investment banks could cull as much as 7pc of their staff this year.

Deutsche Bank said it was “conservatively” estimating a 25pc peak to trough reduction in staff numbers and that the cuts seen so far were just the start of a far more severe reduction in staff numbers.

“Most cost cutting in the last 18 months has been shedding headcount added in the mini-bull market of late 2009 and early 2010. Only in H2 2012 [the second half of last year] has true cost reduction gathered momentum,” said the bank.

IMAS’s tracking of the FSA’s register is regarded as one of the most accurate databases available of actual employment in the City, as it monitors on a month-by-month basis the number of staff employed in the high-end frontline jobs that require approval from the regulator.

“This is the only database of its kind and shows the extent of the cutbacks” claimed Olly Laughton-Scott, founding partner of IMAS.

City headhunters say the continued cull in frontline jobs is likely to come hand-in-hand with far lower bonuses for most staff.

Veni Partners, a City recruitment firm, estimates bonuses levels will be down 30pc on last year and said the message from banks to staff was that “this year, your job is your bonus”.

The Centre for Economics and Business Research estimates that the total industry bonus pot this year will amount to little more than £1.3bn, about a tenth of its size back in 2007 at the peak of the market.

Douglas McWilliams, chief executive of the CEBR, said he thought the bonus pool was likely to shrink again this year, before flattening out.

Even the most senior staff will not escape the impact of the downturn and according to Veni Partners an increasing proportion of top bankers are being given “Chairman” and “Vice Chairman” titles that essentially allow investment banks to cut their basic pay package and make any bonus depend directly on the business the individual is able to bring in.

With lower bonuses and job cuts on the horizon, an increasing number of bankers are opting to leave the City and either start their own consultancy or take jobs in the corporate sector, often working for their former clients.